According to the International Monetary Fund’s world economic outlook, the “risks for a serious global slowdown are alarmingly high” in the coming year. So how will the economic uncertainty impact the advertising industry?
Marketing budgets are already under pressure as the U.S. economy plods along at steady, but lackluster growth rates and international markets struggle with the uncertainty surrounding the European Union. Like it or not, Europe is an important part of the “growth” conversation. Why? Europe accounts for approximately one-fifth of both the U.S.’ and China’s total exports. Thus, if the economic situation in Europe takes a downturn, the repercussions on the world’s two largest economies could be significant.
In spite of the challenges posed by the global economic situation, from a marketing perspective, Zenith Optimedia is forecasting a 4.5% spending growth rate in 2013 to $524.7 billion. Of note, a majority of the growth will occur in the United States. Zenith’s CEO commented that while marketing spend levels are “solid,” companies are “seeking to ensure that any expenditures are delivering strong return on investment.”
With demand generation a desired, but uncertain outcome for marketers, the role of marketing accountability increases in importance to help keep all stakeholders focused on performance. Establishing clear marketing KPIs that are aligned with an organization’s business goals, and translating those KPIs into specific performance criteria for each agency in an advertiser’s marketing services agency network, is a critical first step in any accountability program.
Once performance goals have been established, everything will fall in place, right? Not necessarily. Advertisers may want to evaluate agency remuneration programs, staffing plans and statements of work to insure that these foundational elements of an agency stewardship system are properly constructed and conducive to aligning their agencies’ resource investments with the desired outcomes. Layer on a continuous monitoring program which provides all stakeholders with the requisite information for assessing progress and adjusting resource allocations on a timely basis and the chances for improving the efficacy of one’s marketing investment will be significantly enhanced.
While there are no guarantees when it comes to ROMI, experience has shown that a deliberate systematic approach to marketing resource management can boost results. In the words of Sir Edward Coke the noted English barrister;
“Precaution is better than cure.”
In a slow growth environment, with budgetary pressures likely for the foreseeable future, this may very well be the “cost of entry.” In our Agency Contract Compliance & Performance practice, we see the results of marketer commitment to sound accountability practices first hand.
Interested in learning more, contact us for a complimentary consultation on, “Building a High Performance Marketing Agency Network.” Simply contact Don Parsons, Principal at firstname.lastname@example.org to schedule a convenient time.